The Cluster as Market Organization
The many competing schools of thought concerning themselves with industrial clusters have at least one thing in common: they all agree that clusters are real life phenomena characterized by the co-localization of separate economic entities, which are in some sense related, but not joined together by any common ownership or management. So hierarchies they are certainly not. Yet, it is usually taken for granted that clusters, almost regardless of how they are defined, all expatriate the 'swollen middle' of various hybrid 'forms of long-term contracting, reciprocal trading, regulation, franchising and the like' residing somewhere between hierarchies and markets. This fundamental (but usually implicit) assumption would, perhaps, be justified if markets could be reduced to events of exchange of property rights, between large numbers of price-taking anonymous buyers and sellers supplied with perfect information as they are commonly conceived in mainstream economics. One of the original attractions of Neoclassical price theory was precisely that it promised a way of analysing the economy in general and market exchange in particular independently of specific institutional settings. However, introducing transaction costs as more than fees paid to intermediaries leads inevitably to comparative institutional analysis and, not to be forgotten, to the perception of markets as institutions with specific characteristics of their own. Some sets of characteristics are so common that they represent a specific market organization or market form. The cluster is one such specific market organization that is structured along territorial lines because this enables the building of a set of institutions that are helpful in conducting certain kinds of economic activities. Supported by empirical illustrations the paper argues that clusters are markets where commodities, services and knowledge are traded in a notably efficient way among the insiders without restricting their abilities to build pipelines and to interact with suppliers and customers residing elsewhere. The institutions characterizing this market form help creating an environment among insiders that reduces the barriers to acquiring and utilising knowledge produced or used locally.
|Date of creation:||2003|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.druid.dk/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
- Foss, Kirsten & Foss, Nicolai J, 2002. "Organizing Economic Experiments: Property Rights and Firm Organization," The Review of Austrian Economics, Springer, vol. 15(4), pages 297-312, December.
- Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
- Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
- Lissoni, Francesco, 2001. "Knowledge codification and the geography of innovation: the case of Brescia mechanical cluster," Research Policy, Elsevier, vol. 30(9), pages 1479-1500, December.
- Belussi, Fiorenza, 1999. "Policies for the Development of Knowledge-Intensive Local Production Systems," Cambridge Journal of Economics, Oxford University Press, vol. 23(6), pages 729-47, November.
- Maskell, Peter & Malmberg, Anders, 1999. "Localised Learning and Industrial Competitiveness," Cambridge Journal of Economics, Oxford University Press, vol. 23(2), pages 167-85, March.
- Anders Malmberg & Peter Maskell, 2002. "The elusive concept of localization economies: towards a knowledge-based theory of spatial clustering," Environment and Planning A, Pion Ltd, London, vol. 34(3), pages 429-449, March.
- Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
- Hagedoorn, John & Schakenraad, Jos, 1992. "Leading companies and networks of strategic alliances in information technologies," Research Policy, Elsevier, vol. 21(2), pages 163-190, April.
- Dominic Power & Daniel Hallencreutz, 2002.
"Profiting from Creativity? The Music Industry in Stockholm, Sweden and Kingston, Jamaica,"
Environment and Planning A,
, vol. 34(10), pages 1833-1854, October.
- Dominic Power & Daniel Hallencreutz, 2002. "Profiting from creativity? The music industry in Stockholm, Sweden and Kingston, Jamaica," Environment and Planning A, Pion Ltd, London, vol. 34(10), pages 1833-1854, October.
- Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-96, September.
- Harald Bathelt & Andersand Malmberg & Peter Maskell, 2002. "Clusters and Knowledge Local Buzz, Global Pipelines and the Process of Knowledge Creation," DRUID Working Papers 02-12, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Per Lundequist & Dominic Power, 2002. "Putting Porter into Practice? Practices of Regional Cluster Building: Evidence from Sweden," European Planning Studies, Taylor & Francis Journals, vol. 10(6), pages 685-704, September.
- Håkansson, Håkan & Snehota, Ivan, 1989. "No business is an island: The network concept of business strategy," Scandinavian Journal of Management, Elsevier, vol. 5(3), pages 187-200.
- Klein, Benjamin, 1983. "Contracting Costs and Residual Claims: The Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 367-74, June.
- Cowan, Robin & David, Paul A & Foray, Dominique, 2000.
"The Explicit Economics of Knowledge Codification and Tacitness,"
Industrial and Corporate Change,
Oxford University Press, vol. 9(2), pages 211-53, June.
- Robin Cowan & Paul A. David & Dominique Foray, 1999. "The Explicit Economics of Knowledge Codification and Tacitness," Working Papers 99027, Stanford University, Department of Economics.
- Cowan Robin & David Paul & Foray Dominique, 1999. "The Explicit Economics of Knowledge Codification and Tacitness," Research Memorandum 025, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Ruggie, John Gerard, 1993. "Territoriality and beyond: problematizing modernity in international relations," International Organization, Cambridge University Press, vol. 47(01), pages 139-174, December.
- Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-84, December.
- Freeman, C., 1991. "Networks of innovators: A synthesis of research issues," Research Policy, Elsevier, vol. 20(5), pages 499-514, October.
- Allen J. Scott, 1997. "The Cultural Economy of Cities," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 21(2), pages 323-339, 06.
- Brian J. Loasby, 1994. "Organisational Capabilities And Interfirm Relations," Metroeconomica, Wiley Blackwell, vol. 45(3), pages 248-265, October.
- Schmitz, Hubert, 1999. "Collective Efficiency and Increasing Returns," Cambridge Journal of Economics, Oxford University Press, vol. 23(4), pages 465-83, July.
- Davies, Andrew & Brady, Tim, 2000. "Organisational capabilities and learning in complex product systems: towards repeatable solutions," Research Policy, Elsevier, vol. 29(7-8), pages 931-953, August.
- Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
- Dahlman, Carl J, 1979. "The Problem of Externality," Journal of Law and Economics, University of Chicago Press, vol. 22(1), pages 141-62, April.
- DeBresson, Chris & Amesse, Fernand, 1991. "Networks of innovators :A review and introduction to the issue," Research Policy, Elsevier, vol. 20(5), pages 363-379, October.
When requesting a correction, please mention this item's handle: RePEc:aal:abbswp:03-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keld Laursen)
If references are entirely missing, you can add them using this form.